To stimulate investment and increase production, India plans to open 69 oil fields for competitive bidding.
Held by Oil India Ltd. and Oil & Natural Gas Corp. Ltd., the fields have not been exploited because of isolated locations, small reserves, high development costs, technological constraints, and fiscal policy.
Under the new policy for marginal fields, revenue sharing will replace the profit sharing methodology. PIB-India said profit sharing “led to many delays and disputes” with the government scrutinizing cost details of private participants. With the new policy, government will not be concerned with the cost incurred and will receive a share of the gross revenue from the sale of oil and gas.
A second change involves licensing that will cover all hydrocarbons found in the field, not just one. A separate license had been required if, for example, gas was found.
The new policy for marginal fields also allows the successful bidder to sell at the prevailing market price of gas, instead of at an “administered” price.